Why Are American Health Care Costs So High?

Transcript

00:00
good morning Hank it’s Tuesday I want to
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talk today about why healthcare costs in
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the United States are so phenomenally
00:04
fascinatingly expensive but first I have
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to blow your mind all right so you’ve
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probably heard that the reason people
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enjoy quote-unquote free health care in
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Australia and the UK and Canada etc etc
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is that they pay higher taxes that money
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then goes into a big pot and is used to
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pay for people’s health care but in fact
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in the United States we spend more tax
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money per capita on health care than
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Germany Australia the United Kingdom or
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Canada that’s right Hank you pay more in
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taxes for healthcare than you would if
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you were British and in exchange for
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those taxes you get no health care in
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fact only about 28% of Americans get
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their health insurance through
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government funded programs mostly poor
00:44
people old people and congresspeople but
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as you can see in this graph our private
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health care spending most Americans are
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privately insured through their
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employers is way higher than anywhere
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else in the world in total the u.s.
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currently spends about 18% of its gross
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domestic product on health care costs
01:00
Australia by comparison 9% why is this
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well because everything costs more which
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seems obvious but apparently it isn’t
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because every article you read is like
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oh it’s because of malpractice insurance
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or it’s because we’re obese or we go to
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the doctor too much or people are
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prescribed too many medications well not
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really it’s because everything costs
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more a hip replacement in Belgium costs
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$13,000 in the u.s. it’s often over a
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hundred thousand dollars colonoscopies
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averaged over eleven hundred bucks
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apiece in the US and Switzerland there’s
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six hundred fifty five dollars and on
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average a month of the drug lipitor will
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cost you 124 dollars if you live in the
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United States if you live in New Zealand
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seven dollars now we are also not to
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brag richer than all of these countries
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so it makes sense that we should spend a
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little more on health care but we don’t
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spend a little more we spend a ton more
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and vitally we don’t get anything for
01:53
that money which means we are
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essentially paying people to dig holes
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and then fill those holes back up like
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we don’t live longer in fact we’re
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thirty thirty life expectancy and
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everything from asthma to cancer
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according to one recent nonpartisan
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study American health outcomes are not
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notably superior so why are we spending
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all this money for nothing well first
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let’s discuss some of the problems that
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are not
02:12
Trulli problems for instance the problem
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is not so-called overutilization the
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idea that Americans go to the doctor
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more and get more tests and spend more
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time in hospitals we know this because
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Americans actually go to the doctor less
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than Europeans and spend much less time
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in hospitals although to be fair you can
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stay in a Dutch hospital for seven
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nights for what it costs to stay an
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American one for one night so no wonder
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we’re hesitant also it is not because we
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are sicker than other people everybody
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likes to blame obesity on our rising
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healthcare costs but ya know that
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argument is just not supported by data
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for one thing disease prevalence does
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not affect healthcare cost that much and
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for another thing while we do have more
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obesity in the United States which
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sometimes leads to health problems we
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have fewer smokers and less alcohol
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consumption really apparently yes so
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that saves us a little money and if you
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compare us to like the British or the
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French in the end it’s probably a wash
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thank the truth as usual is complex like
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there are obvious inefficiencies in our
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healthcare system for instance not
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everyone has insurance if you don’t have
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insurance you still get health care but
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you are responsible for paying for that
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health care which often you can’t do so
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you end up going bankrupt that sucks for
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you obviously because you’re bankrupt
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but it also sucks for the rest of us
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because we have to pay not only for your
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care but also for all the money the
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hospital spent trying to get you to pay
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for your care also the only options
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available to uninsured people are
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usually the most expensive options like
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emergency rooms which is just bananas
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but those inefficiencies are hard to
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measure fortunately there are things
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that we can measure so like I said
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before because the u.s. is one of the
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richest countries in the world you would
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expect us to pay a little more for
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health care than most people the
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question is when do we pay more than you
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would expect us to pay and that turns
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out to be pretty interesting let’s start
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with malpractice and so-called defensive
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medicine the idea here is that doctors
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are scared of huge malpractice suits so
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they order a lot of unnecessary tests in
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order to like cover their butts that
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does contribute to our health care costs
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like there are more MRIs and CT scans in
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the US than anywhere else however there
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are a bunch of states like Texas that
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have passed tort reform to limit
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malpractice suits and in those states
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health care costs have dropped by an
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average of a whopping point one percent
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the biggest estimates for the total cost
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of defensive medicine put it around 55
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billion dollars which is a lot of money
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but it’s only 2% of our total healthcare
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costs another smallish factor doctors
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and to a lesser extent nurses are paid
04:26
more in you
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United States than they are in other
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countries and by my possibly faulty math
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we end up spending about 75 billion
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dollars more than you would expect us to
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there then we have the cost of insurance
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and administrative costs like paperwork
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and marketing and negotiating prices all
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that stuff that’s about ninety billion
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dollars more than you would expect us to
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spend we spent about a hundred billion
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dollars more than you would expect on
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drugs not so much because we take more
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of them but because the ones that we
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take cost more per pill okay and now for
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the big one I’m going to lump inpatient
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and outpatient care together because in
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the u.s. we do a lot of things as
04:57
outpatient procedures like gallbladder
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surgeries that are often inpatient
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procedures in other hospitals so we’re
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just going to make a big ball that big
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ball is five hundred billion dollars
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more than what you would expect given
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the size of our economy per year why
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well because in the United States we do
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not negotiate as aggressively as other
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countries do with healthcare providers
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and drug manufacturers and medical
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device makers so like in the UK the
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government goes out to all the people
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who make artificial hips and says one of
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you is going to get to make a crap ton
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of fake hips for everybody who is
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covered by the NHS here in the United
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Kingdom but you better make sure your
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fake hips are safe and you better make
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sure that they’re cheap because
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otherwise we’re going to give our
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business to a different company and then
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all the fake hip companies are motivated
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to offer really low prices because it’s
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a huge contract like think if your
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company got to put hips inside of
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everyone in England and Scotland and
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Wales and Northern Ireland I guess not
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everyone just the people who need hips
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but in the u.s. we don’t have any of
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that centralised negotiation so we don’t
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have as much leverage the only big
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exception is Medicare the
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government-funded health care for old
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people which not coincidentally always
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gets the lowest prices
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so basically Hank in the United States
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providers charge whatever they think
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they can get away with and they can get
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away with a lot because it’s really
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difficult to put a price on like not
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dying this is a phenomenon called
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inelastic demand like if you tell me
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that this drug that will save my life
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cost seven dollars a month I will pay
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you $7 a month for it if you tell me
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that it costs 124 dollars a month I will
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find a way to find 124 dollars a month
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to pay for it you can’t negotiate
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effectively on your own behalf for
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health care services because you need
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them and not like you need a new MacBook
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Air or the new season of Sherlock but
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actual
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physical need I guess it is like the new
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season of Sherlock so basically Hank
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until and unless we can negotiate as
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effectively with the people providing
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health care as Australians and British
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people do us healthcare costs will
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continue to rise faster than anywhere
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else in the world and we won’t get
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better healthcare outcomes Hank I know
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this video is long although it could
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have been much longer but I am so tired
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of people offering up simple
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explanations for what’s wrong with our
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healthcare system they say oh it’s
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malpractice or it’s doctors who must
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also be business people or it’s
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insurance companies or it’s insane rules
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for who can get insurance it’s drug
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companies it’s government bureaucracy
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it’s an inability to negotiate prices
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yes yes yes yes and yes it is all of
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those things and more it is not a simple
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problem there will not be a simple
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solution but it is probably the biggest
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single drag on the American economy and
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it’s vital that we grapple with it
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meaningfully instead of just treating
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health care costs as political theater
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so I hope I’ve at least introduced the
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complexity of the problem I put some
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thoroughly nonpartisan links in the
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doobly-doo for further reading Hank
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welcome back to the United States as you
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can see everything is peachy here I’ll
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see you on Friday
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friendly reminder educational videos are
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allowed to be more than four minutes
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long all the people who are commenting
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about how punished I am did not watch to
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the end of the video I feel dizzy

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